(Bloomberg)—After weeks of hand-wringing over its fate, the flagship location of Barneys New York Inc. will stay open for at least another year, albeit with a new format.
The store will morph into a “pop-up retail experience” including boutiques, art and other cultural events, according to a statement Friday from its new owner, Authentic Brands Group LLC.
But the center of gravity will move down the street. “Our first flagship will be 50,000 square feet on Fifth Avenue inside Saks,” Jamie Salter, founder and chief executive officer of Authentic, said in an interview.“This gives Saks an opportunity to attract a new customer that they don’t necessarily have today.”
At the Madison Avenue site, meanwhile, Barneys will occupy four floors after it takes over in February, when it will reset the space to the new concept, Salter said. It could roll the format out to more locations if it works well, he said.
Salter said he’s not yet sure how many employees will work at the re-imagined Madison Avenue space. “Experiential does not necessarily take as many people to run as traditional retail,” he said.
The expensive rent at the Madison Avenue store was a major cause behind the retailer’s decision to seek Chapter 11 protection in August, and the location was expected to close under Authentic’s bid. The landlord, Ashkenazy Acquisition Corp., said the store will remain open in a smaller format for the next 12 months while longer-term solutions are explored.
“We are extremely disappointed by the outcome of today’s proceedings,” Daniel Levy, president of Ashkenazy, said in a statement, after the sale to Authentic was formalized in court. “We have come to terms with Authentic Brands Group, Barneys new owner, to keep the Madison Avenue store open in a smaller footprint.”
Authentic is buying the New York retailer with a plan to open shops in Saks Fifth Avenue stores and operate some free-standing stores. Creditors objected to its bid, calling it “devastating” because it called for more closings than other potential offers. But no other parties were able to assemble financing for a better offer, leaving Authentic as the new owner.
Closeout sales are expected to begin as early as next week at some Barneys stores and Barneys Warehouse locations, according to firms handling the events. An announcement by B. Riley Financial Inc.’s Great American Group and Tiger Capital Group LLC said the sales will include exclusive events for Barneys’ most loyal customers.
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Nicole Bullock, Dawn McCarty
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